ATM-A2 MILK

[BlackPeter]

Well - SML made the mistake of not mitigating their one trick pony strategy (solely relying on ATM) - and look where they are now.

Interesting to read in todays update from A2M, that they follow the same strategy:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/426363/412760.pdf

David said: "We continued to execute against our growth strategy, primarily focused on the China market which now represents approximately 80% of our total branded sales"

80% of his eggs in one basket - WOW. If this basket drops or breaks, than there will be a lot of spilled eggs ...

But hey, their biggest market is just run by an autocrat preparing for the next war and running a system where the only law is what said autocrat wishes to do to stay in power ... what could possibly go wrong with this investment?

[Left Field]

ATM is a long way from being a "one trick pony". Clearly A2's cunning plan is to play to its China strengths whilst is expands its markets elsewhere and gears up production in Australia, MVM and possibly SML.

• Accelerated sales growth of other nutritional products, up 48.5%, utilising A1 protein free milk powders produced by MVM
• Continued to develop a2 Milk® Lactose Free market penetration and progressed major upgrade of Kyabram processing facility in Victoria with Kyvalley Dairy Group
• Improved profitability of USA business, commenced distribution of a2 Platinum® IMF under US Food and Drug Administration (FDA) Enforcement Discretion with selected retailers in-store and online, and progressed long-term FDA IMF approval with clinical trial underway

[KW]

Whether you think A2 is investable or not, the fact remains even with the upbeat earnings result, it is still overvalued.  Sitting on a P/E of 28 and paying no dividend.  Compare that to other companies you can buy on the stock market, like STP.ASX which is on a P/E of 26 and pays a 4% dividend and is growing Revenue at 25% and EBITDA at 35% and has a gross margin of 81%

The share price needs to reflect A2's lower margins and low growth earnings.  Its not the high growth high flier it used to be, more of a plodder now, trying to eke out market share gains in a shrinking market.  

[winner (n)]

Whether you think A2 is investable or not, the fact remains even with the upbeat earnings result, it is still overvalued.  Sitting on a P/E of 28 and paying no dividend.  Compare that to other companies you can buy on the stock market, like STP.ASX which is on a P/E of 26 and pays a 4% dividend and is growing Revenue at 25% and EBITDA at 35% and has a gross margin of 81%

The share price needs to reflect A2's lower margins and low growth earnings.  Its not the high growth high flier it used to be, more of a plodder now, trying to eke out market share gains in a shrinking market. 

What i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.

One advantage of having cash in the bank .....but it wasn't used to grow the business profusely per se. ...... essentially no profit growth if interest income excluded ...as KW says just a plodder

[KW]

What i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.

One advantage of having cash in the bank .....but it wasn't used to grow the business profusely per se. ...... essentially no profit growth if interest income excluded ...as KW says just a plodder

Nice pick up Winner.  I havent seen that mentioned in the writeups.  

[Breezy]

Nice pick up Winner.  I havent seen that mentioned in the writeups. 

Old news, a lot of us knew this yesterday morning, huge war chest of cash is much better than those high flying forever loss making tech companies.

[CG]

What i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.

One advantage of having cash in the bank .....but it wasn't used to grow the business profusely per se. ...... essentially no profit growth if interest income excluded ...as KW says just a plodder

Could you support your statement with numbers from the report please?

[CG]

Whether you think A2 is investable or not, the fact remains even with the upbeat earnings result, it is still overvalued.  Sitting on a P/E of 28 and paying no dividend.  Compare that to other companies you can buy on the stock market, like STP.ASX which is on a P/E of 26 and pays a 4% dividend and is growing Revenue at 25% and EBITDA at 35% and has a gross margin of 81%

The share price needs to reflect A2's lower margins and low growth earnings.  Its not the high growth high flier it used to be, more of a plodder now, trying to eke out market share gains in a shrinking market. 

What is the total shareholder return since float for this wonderful STP.ASX company? How much profit did they make in the previous couple of years? How much dividends paid? If I'm not mistaken their latest profit is few times less then A2M's interest income, is it right?

[Left Field]

What i found rather intriguing about the result was that nearly all the increased profit came from greater interest income.

Interesting Winner..... Just had time to read through their presentation. ATM doing well on many fronts.

Net sales increase of $29 mill ( ie on total net sales $811 Mill) v Interest income of $16.5 Mill? ) Refer page 22 of their presentation.

Anyways a risk free.... freehold.... hold for me.

[KW]

What is the total shareholder return since float for this wonderful STP.ASX company? How much profit did they make in the previous couple of years? How much dividends paid? If I'm not mistaken their latest profit is few times less then A2M's interest income, is it right?

How is any of that relevant?  The past is the past.  You invest today because you think the share price is going to go up in the future.  Which company is more likely to triple its share price in the next 5 years?  Hint.  Its not A2.

[CG]

How is any of that relevant?  The past is the past.  You invest today because you think the share price is going to go up in the future.  Which company is more likely to triple its share price in the next 5 years?  Hint.  Its not A2.

It's relevant as much as comparing small underwear business to big dairy company. Yes, it's much harder to triple $1.6b sales than $90m. But some past performance might help to see a trend of the future. Past and future in it together. Btw, didn't you say something similar about BUB's chances to outperform and triple in the future? How is that going?

[KW]

It's relevant as much as comparing small underwear business to big dairy company. Yes, it's much harder to triple $1.6b sales than $90m. But some past performance might help to see a trend of the future. Past and future in it together. Btw, didn't you say something similar about BUB's chances to outperform and triple in the future? How is that going?

I no longer own BUB so I dont really care.  I'm here to make money, not to be right.  I dont hang around in underperforming stocks because they once used to be good companies.  As they say "when the facts change, I change my mind.  What do you do?"

[Buzz]

Up 54% from Nov'23 lows, golden cross 22/2, flirting with 61.8% Fib retrace to Feb'23 high. https://invst.ly/13n9bq

[blackeyed]

Of course it depends on birth rates. I have attached a report which suggests a turnaround is imminent. The Executive Summary is set out below and the full report is attached.
Executive Summary
The convergence of the end of Covid 19 lockdowns, the rapid expansion of hukou eligibility, the introduction of a raft of policies to make child bearing more economic for Chinese families, and the end of birth deferral will absolutely lead to a reversal in the decline in the birth rate.
Leaving aside the impact of applying universally the registration of all children born out of wedlock and the provision of urban Hukou status to migrant families (which will be significant), the increase in birth registrations resulting from the ending of birth deferral over the next 5 to 7 years will result in an additional 4 million births per annum, or a 50% increase on current levels.
There is a very real economic burden imposed by hukou refusals. Withdrawal of these refusals provides significant incentives for previously disadvantaged groups to have children.  The reversal of the birth rate and numbers decline could well be dramatic. The question is not if, it's when.
The analysis shows that each year a significant proportion of births are "shadow births" and are not revealed in either the official statistics or market research analysis.
The data also shows that over 50% of births occur in rural locations and in Tier 3 and 4 cities where market research companies like Kantar and Smart Path operate very infrequently. Moreover the parents of many of the children born in these contexts do not have access to online channels. Whether, and to what extent, their children consume infant formula and what brands remains a mystery.
This report shows there is much that is unknown about the consumption habits of a significant portion of Chinese births and that it is completely false and wrong to claim "double digit declines" and "steep declines'' in the infant formula market based on statistics which this report shows are highly inaccurate, under-enumerated, and exclude a very large portion of the potential infant formula market.

[blackeyed]

Mimimoke

Hi you might remember me Blackeyed. I have attached a file on Chinese Birth Rates which I have authored. I give ypu permission to copy it and post on Hotcopper Australia. Its all sourced and footnoted. Could you convert from Word to PDF before posting as my PDF file is too big to post here.